ABSTRACT: This paper analyzes the effect of inter urban buses competing on a few
routes against trains within an established railway network. In line with expectations,
we show that this can lead to unprofitable train service on these
routes. However, within an established railway network with every track being
protable, competition on just some tracks can result in a collapse of the
entire network. External eects of individual routes on the railway network
are fundamental for the profitability of the network. Hence, weakening these
network effects might be crucial. As a result, efficient intermodal competition
on some routes might cause the abandoning of other routes that are not facing
any competition. This effect has to be taken into account by political actors
when liberalization of inter urban bus travel is considered.